Specification of arteries and veins is a key process for establishing functional vasculature during embryogenesis and involves distinctly different signaling mechanisms. Angiogenic factor VEGFA is required for differentiation of arteries, however, the upstream angiogenic factor for vein specification is unknown. Klippel-Trenaunay syndrome (KTS) is a congenital vascular disease associated with capillary and venous malformations, but not with arterial defects. We have previously reported that up-regulation of angiogenic factor AGGF1 is associated with KTS, but the molecular mechanism is not clear. Here we show that AGGF1 is involved in establishing venous identity in zebrafish embryos. Overexpression of AGGF1 led to increased angiogenesis and increased lumen diameter of veins, whereas knockdown of AGGF1 expression resulted in defective vasculogenesis and angiogenesis. Overexpression of AGGF1 increased expression of venous markers (e.g. flt4), but had little effect on arterial markers (e.g. notch5). Knockdown of AGGF1 expression resulted in loss of venous identity (loss of expression of flt4, ephb4, and dab2), but had no effect on the expression of arterial development. We further show that AGGF1 activates AKT, and that decreased AGGF1 expression inhibits AKT activation. Overexpression of constitutively active AKT rescues the loss of venous identity caused by AGGF1 down-regulation. Our study establishes AGGF1 as an angiogenic factor critical for specifying vein identity and suggests that AGGF1-mediated AKT signaling is responsible for establishing venous cell fate. We propose that increased AGGF1 expression leads to increased vein differentiation by inducing activation of AKT signaling, resulting in venous malformations in KTS patients.